More than a fifth of insurance firms are planning to enhance their IT as mergers, expansion and regulation top industry concerns.
A survey of customers, carried out by software maker Sequel, found that 21% of respondents were most concerned with enhancing systems.
The biggest concerns were managing expansion (25%), growth and mergers as well as meeting regulation (23%). IT systems are critical to both of these, said Bob MacDowall, analyst at Towergroup.
"If you expand and meet regulations you have to enhance IT systems because they support and drive them," he said.
He added that the use of legacy systems will create dilemmas for insurers' IT chiefs.
"Do they enhance legacy systems or do they rip and replace?"
MacDowall said meeting the Solvency II regulations, which involves bringing together internal and external data, will also mean IT heads will have tough make decisions. These will include whether to use legacy systems and put new layers of software on top or replace them.
Michael Graham, director at Sequel, said, "Insurance professionals are clearly planning for success while keeping a careful eye on regulation. I believe that organisations will be making more business decisions to use technology to prepare for growth, change and improvement.